Tuesday, January 5, 2021

This Election Is Rigged. To Explode...

Dollar shorts are making massive (implicit) bets the Democrats win, despite being the long odds. On the other hand, if the Republicans win that would mean Georgian elections are only rigged against Trump. Can you imagine what story these super morons will invent when that happens? It will mean the bipartisan Deep State conspired to keep dumbfucks out of office, having let one accidentally slip by in 2016. Trump's Herculean breaking of the IQ barrier only lasted one cycle...








Ironically if the Democrats do win it will be mostly thanks to Trump. Only McDonald Trump goes to a political rally to sow massive doubt as to the validity of voting:


"Desperate, deluded and dangerous, President Donald Trump drove America deeper into a political abyss on Monday night in his zeal to steal an election he lost and to destroy faith in the democracy that fairly ejected him from office."


From a markets standpoint, bulls will have to be Harry Houdini to get out of this one. Unlike the November election, which saw a sell-off and VIX spike going into the election, this time, volatility is somnolent and bulls are fat and happy.

Here is the set-up going into this all-important election. S&P new highs peaked back in early November, and yet the S&P has continued levitating in this rising wedge, as bulls went ALL IN:





We were informed via Wall Street yesterday, that a "blue wave" is NOT priced into markets. Only the prevailing "Goldilocks" Hunger Games gridlock is priced in to markets. Which means that a true economic recovery is not priced in - only further dramatic monetary multiple expansion is priced in to Disney markets. 

So imagine if the Democrats win, all of a sudden the momentum Tech trade gets monkey hammered deja vu of the vaccine selloff in early November when Pfizer announced their vaccine was 95% effective: The Russell 2000 spiked and the Nasdaq 100 crashed. 

Since the stimulus passed Congress two weeks ago, the ultra-crowded virtual economy Tech trade has been getting monkey hammered. One could argue that a Democrat win will be the last straw:




However, the more likely scenario is a Republican win, which would mean continued deflationary fiscal policy. 

That scenario will monkey hammer the reflation trade and by extension the short dollar carry trade which is now embedded in the most overvalued global markets:


"Rarely, if ever, can a year have started with price levels in emerging markets looking so divorced from the fundamental backdrop"

Developing-nation stocks ended 2020 at the highest level in 13 years while currencies edged closer to their 2018 record"


As it was in 2018, EMs are betting on massive global reflation. For these markets dollar reversal is not an option. Back in 2018, global markets actually believed the Trump tax cut would benefit the middle class. 

What fools. 





So, no matter which way this election goes, someone is about to be very disappointed. If the Democrats win, at least Trump can tell the newly under-employed Mitch McConnell he was right to tell Republicans to avoid the polls, because the election was rigged:

"The Deep State strikes again"

History will not be kind with this experiment of having a mentally challenged president, to give his base a feeling of national inclusion. 


Here is where it gets interesting for Disney markets:

Three years ago this week in 2018, Crypto market cap peaked. Yesterday it reached a new all time high, however, Bitcoin crashed -20% over this past weekend and is now three wave corrective.

The difference between now and 2018 is that three years ago Crypto market cap peaked ahead of stock market speculation, whereas this time it's reversed - stock market speculative indicators peaked two weeks ago. Which means that the crypto surge combined with the EM blow off is marking the end of the global rally:






This next chart shows Nasdaq total volume.

What we notice is that volume tends to rise during selloffs and recede during rallies, however this time - since the November election - volume has been rising to new record highs.

Which means that "Sell" is the new Black Swan event. Because the machines can't handle what comes next.






Then when the machines explode and Bitcoins and Tesla go bidless, and Robinhood goes offline, everyone will realize this is not the beginning of the cycle.

It's the exact other end. The one where the retail bubble newbies rush into markets to become the bagholder of record.

In the Wall Street tradition.






This is Trump helping Republicans in Georgia: